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8-K - 8-K - Farmland Partners Inc.a18-7355_18k.htm

Exhibit 99.1

 

Farmland Partners Inc. Reports Fourth Quarter and Full Year 2017 Results

 

DENVER, March 1, 2018 /PRNewswire/ - Farmland Partners Inc. (NYSE: FPI) (the “Company”) today reported financial results for the quarter and year ended December 31, 2017.

 

Fourth Quarter 2017 Highlights

 

·                  Reported total operating revenues of $15.6 million, a 17% increase over the same period in 2016

·                  Reported operating income of $10.2 million, a 22% increase over the same period in 2016

·                  Reported basic net income available to common stockholders of $0.08 per share

·                  Reported Adjusted EBITDA of $12.7 million, a 25% increase over the same period in 2016

·                  Reported AFFO per share of $0.16

·                  Acquired 5,114 acres of permanent crop farmland in California’s Central Valley for $110 million

·                  Executed an agreement with Rabo AgriFinance, LLC to provide the Company with up to $80.0 million in term loan financing

 

Full Year 2017 Highlights

 

·                  Reported total operating revenues of $46.2 million, a 49% increase over 2016

·                  Reported operating income of $22.5 million, a 44% increase over 2016

·                  Reported basic net income available to common stockholders of $0.03 per share

·                  Reported Adjusted EBITDA of $33.7 million, a 56% increase over 2016

·                  Reported AFFO per share of $0.36

·                  Completed merger with American Farmland Company (AFCO) in a stock-for-stock transaction for gross consideration of $246.1 million

·                  Closed an additional $225.9 million of farm acquisitions, in addition to the AFCO merger

·                  Raised $144.5 million of net proceeds through the issuance of approximately 6.0 million shares of 6.00% Series B participating preferred stock in an underwritten public offering

 

“The fourth quarter of 2017 punctuated what we believe was a strong year for the Company. We were able to beat the midpoint of our original 2017 full year AFFO per share guidance, despite incurring approximately $0.09 per share of preferred dividend costs we had not originally expected” said Paul Pittman, CEO of the Company. “We continue to increase scale and reduce expenses as a percentage of revenue and assets.”

 

Financial Results

 

For the three months ended December 31, 2017, the Company recorded net income of $6.5 million and basic net income available to common stockholders of $0.08 per share, as compared to net income of $6.5 million and basic net income available to common stockholders of $0.26 per share for the same period during 2016. For the full year 2017, the Company recorded net income of $9.2 million and basic net income available to common stockholders of $0.03 per share, as compared to net income of $6.0 million and basic net income available to common stockholders of $0.09 per share for 2016.

 

For the three months ended December 31, 2017, the Company recorded Adjusted Funds from Operations (“AFFO”) of $5.9 million and AFFO per fully diluted share of $0.16, as compared to AFFO of $7.3 million and AFFO per fully diluted share of $0.36 for the same period during 2016. For the full year 2017, the Company recorded AFFO of $13.3 million and AFFO per fully diluted share of $0.36, as compared to AFFO of $11.0 million and AFFO per fully diluted share of $0.58 for 2016.

 

See “Non-GAAP Financial Measures” for complete definitions of AFFO and Adjusted EBITDA and the financial tables accompanying this press release for reconciliations of net income to AFFO and Adjusted EBITDA.

 

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Operating Results

 

For the three months ended December 31, 2017, the Company recorded total operating income of $10.2 million and net operating income (“NOI”) of $14.1 million, as compared to total operating income of $8.3 million and NOI of $12.5 million for the same period in 2016. For the full year 2017, the Company recorded total operating income of $22.5 million and NOI of $40.3 million, as compared to total operating revenues of $15.6 million and NOI of $28.6 million for 2016.

 

See “Non-GAAP Financial Measures” for a complete definition of NOI and the financial table included in this press release for reconciliations of total operating revenues to net operating income.

 

Acquisition Activity

 

During the quarter, the Company closed $114.5 million in farm acquisitions. Since January 1, 2018, the Company has completed an additional $27.4 million in farm acquisitions.

 

Capital Markets Activity and Balance Sheet

 

During the quarter, the Company announced that it had executed an agreement with Rabo AgriFinance, LLC to provide the Company with up to $80.0 million in term loan financing in two tranches.

 

As of December 31, 2017, the Company had approximately 38.1 million shares of common stock outstanding on a fully diluted basis, including OP units.

 

The Company had total debt outstanding of $515.8 million at December 31, 2017, compared to total debt outstanding of $309.9 million a year prior.

 

2018 Earnings Guidance

 

The Company is releasing initial full year 2018 AFFO per share guidance of $0.40-0.44 per share. Please refer to page 15 of the Company’s “Q4 2017 Supplemental Package” for more detail.

 

Conference Call Information

 

The Company has scheduled a conference call on Friday March 2, 2018 at 10:00 a.m. (Eastern Time) to discuss its financial results for the fourth quarter ended December 31, 2017. The conference call can be accessed live over the phone toll-free by dialing (866) 262-6804, or for international callers by dialing (412) 902-4107.  Participants can reference the Farmland Partners Inc. Fourth Quarter 2017 Earnings Call. The conference call will also be available via a live listen-only webcast and can be accessed through the Investor Relations section of the Company’s website, www.farmlandpartners.com. A replay of the conference call will be available beginning March 2, 2018 at 1:00 p.m. (Eastern Time) until March 16, 2018 at 11:59 p.m. (Eastern Time), by dialing (877) 344-7529 (U.S.) or (412) 317-0088 (International); passcode: 10117658. A replay of the webcast will also be accessible on the Investor Relations website for a limited time following the event.

 

About Farmland Partners Inc.

 

Farmland Partners Inc. is an internally managed real estate company that owns and seeks to acquire high-quality North American farmland and makes loans to farmers secured by farm real estate. As of the date of this release, the Company owns or has under contract over 166,000 acres in 17 states, including Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois, Kansas, Louisiana, Michigan, Mississippi, Nebraska, North Carolina, South Carolina, South Dakota, Texas and Virginia. We have approximately 30 crop types and over 100 tenants. The Company elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ended December 31, 2014.

 

Forward-Looking Statements

 

This press release includes “forward-looking statements” within the meaning of the federal securities laws, including, without limitation, statements with respect to our full year 2018 outlook, proposed and pending acquisitions, financing activities, crop yields and prices and anticipated rental rates. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” or similar expressions or their negatives, as well as statements in future tense. Although

 

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the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance and our actual results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such a difference include the following: general volatility of the capital markets and the market price of the Company’s common stock or Series B participating preferred stock, changes in the Company’s business strategy, availability, terms and deployment of capital, the Company’s ability to refinance existing indebtedness at or prior to maturity on favorable terms, or at all, availability of qualified personnel, changes in the Company’s industry, interest rates or the general economy, adverse developments related to crop yields or crop prices, the degree and nature of the Company’s competition, the timing, price or amount of repurchases, if any, under the Company’s share repurchase program, the ability to consummate acquisitions under contract and the other factors described in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016, and our other filings with the Securities and Exchange Commission.  Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

 

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Farmland Partners Inc.

Consolidated Balance Sheets

As of December 31, 2017 and December 31, 2016

(Audited, in thousands except par value and share data)

 

 

 

December 31,

 

December 31,

 

($ thousands)

 

2017

 

2016

 

ASSETS

 

 

 

 

 

Land, at cost

 

$

947,899

 

$

551,392

 

Grain facilities

 

11,463

 

6,856

 

Groundwater

 

12,107

 

11,933

 

Irrigation improvements

 

51,678

 

15,988

 

Drainage improvements

 

9,964

 

4,757

 

Permanent plantings

 

52,870

 

1,845

 

Other

 

8,245

 

2,901

 

Construction in progress

 

8,137

 

1,615

 

Real estate, at cost

 

1,102,363

 

597,287

 

Less accumulated depreciation

 

(10,285

)

(3,224

)

Total real estate, net

 

1,092,078

 

594,063

 

Deposits

 

239

 

5,721

 

Cash

 

53,536

 

47,166

 

Notes and interest receivable, net

 

9,760

 

2,843

 

Deferred offering costs

 

292

 

216

 

Deferred financing fees, net

 

348

 

 

Accounts receivable, net

 

6,650

 

4,181

 

Inventory

 

126

 

283

 

Prepaid and other assets

 

3,057

 

1,056

 

TOTAL ASSETS

 

$

1,166,086

 

$

655,529

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Mortgage notes, line of credit and bonds payable, net

 

$

514,071

 

$

308,779

 

Dividends and distributions payable

 

4,847

 

2,938

 

Accrued interest

 

3,193

 

1,538

 

Accrued property taxes

 

1,584

 

1,225

 

Deferred revenue

 

3,907

 

982

 

Accrued expenses

 

2,800

 

4,558

 

Total liabilities

 

530,402

 

320,020

 

 

 

 

 

 

 

Series B Participating Preferred Stock, $0.01 par value, 100,000,000 shares authorized; 6,037,500 shares issued and outstanding at December 31, 2017, and 0 shares issued and outstanding at December 31, 2016

 

144,223

 

 

Redeemable non-controlling interest in operating partnership, Series A preferred units

 

120,510

 

119,915

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

Common stock, $0.01 par value, 500,000,000 shares authorized; 30,334,849 shares issued and outstanding at December 31, 2017, and 17,351,446 shares issued and outstanding at December 31, 2016

 

329

 

172

 

Additional paid in capital

 

350,147

 

172,100

 

Retained earnings

 

5,161

 

4,103

 

Cumulative dividends

 

(31,199

)

(14,473

)

Non-controlling interests in operating partnership

 

46,513

 

53,692

 

Total equity

 

370,951

 

215,594

 

 

 

 

 

 

 

TOTAL LIABILITIES, SERIES B PARTICIPATING PREFERRED STOCK, REDEEMABLE NON-CONTROLLING INTEREST IN OPERATING PARTNERSHIP AND EQUITY

 

$

1,166,086

 

$

655,529

 

 

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Farmland Partners Inc.

Consolidated Statements of Operations

For the three and twelve months ended December 31, 2017 and 2016

(in thousands except per share amounts)

 

 

 

For the Three Months Ended

 

For the 12 Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

(Unaudited)

 

(Audited)

 

 

 

2017

 

2016

 

2017

 

2016

 

OPERATING REVENUES:

 

 

 

 

 

 

 

 

 

Rental income

 

$

14,575

 

$

13,206

 

$

42,956

 

$

29,668

 

Tenant reimbursements

 

678

 

(13

)

1,909

 

263

 

Crop sales

 

269

 

82

 

799

 

846

 

Other revenue

 

41

 

57

 

555

 

224

 

Total operating revenues

 

15,563

 

13,332

 

46,219

 

31,001

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

Depreciation, depletion, and amortization

 

2,142

 

452

 

7,792

 

1,554

 

Property operating expenses

 

1,497

 

850

 

5,897

 

2,379

 

Acquisition and due diligence costs

 

51

 

704

 

930

 

2,521

 

General and administrative expenses

 

1,419

 

2,253

 

7,258

 

7,023

 

Legal and accounting

 

303

 

565

 

1,453

 

1,447

 

Other operating expenses

 

(4

)

196

 

361

 

446

 

Total operating expenses

 

5,408

 

5,020

 

23,691

 

15,369

 

OPERATING INCOME

 

10,155

 

8,312

 

22,528

 

15,632

 

 

 

 

 

 

 

 

 

 

 

OTHER (INCOME) EXPENSE:

 

 

 

 

 

 

 

 

 

Other income

 

(235

)

(203

)

(391

)

(337

)

Loss on disposition of assets

 

153

 

 

200

 

 

Interest expense

 

3,709

 

2,089

 

13,561

 

9,959

 

Total other expense

 

3,627

 

1,886

 

13,370

 

9,622

 

 

 

 

 

 

 

 

 

 

 

Net income before income tax expense

 

6,528

 

6,426

 

9,158

 

6,010

 

 

 

 

 

 

 

 

 

 

 

Income tax (benefit) expense

 

 

(86

)

 

11

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

6,528

 

6,512

 

9,158

 

5,999

 

 

 

 

 

 

 

 

 

 

 

Net (income) attributable to non-controlling interests in operating partnership

 

(891

)

(1,793

)

(1,244

)

(1,761

)

Net loss attributable to redeemable non-controlling interests in operating partnership

 

 

 

 

64

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to the Company

 

5,637

 

4,719

 

7,914

 

4,302

 

 

 

 

 

 

 

 

 

 

 

Nonforfeitable distributions allocated to unvested restricted shares

 

(34

)

(24

)

(151

)

(96

)

Distributions on redeemable non-controlling interests in operating partnership, Common units

 

 

 

 

(113

)

Distributions on redeemable non-controlling interests in operating partnership, Series A preferred units and dividends on Series B Participating Preferred Stock

 

(3,142

)

(858

)

(6,856

)

(2,915

)

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders of Farmland Partners Inc.

 

$

2,461

 

$

3,837

 

$

907

 

$

1,178

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted per common share data:

 

 

 

 

 

 

 

 

 

Basic net income available to common stockholders

 

$

0.08

 

$

0.26

 

$

0.03

 

$

0.09

 

Diluted net income available to common stockholders

 

$

0.07

 

$

0.18

 

$

0.03

 

$

0.09

 

Dividends declared per common share

 

$

0.1275

 

$

0.1275

 

$

0.5100

 

$

0.5100

 

Basic weighted average common shares outstanding

 

32,085

 

14,817

 

31,046

 

13,204

 

Diluted weighted average common shares outstanding

 

44,938

 

25,560

 

31,046

 

13,204

 

 

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Farmland Partners Inc.

Reconciliation of Non-GAAP Measures

For the three and twelve months ended December 31, 2017 and 2016

(in thousands except per share amounts)

 

 

 

For the three months ended December 31,

 

For the twelve months ended December 31,

 

(in thousands except per share amounts)

 

2017

 

2016

 

2017

 

2016

 

 

 

(Unaudited)

 

(Audited)

 

Net income

 

$

6,528

 

$

6,512

 

$

9,158

 

$

5,999

 

Depreciation, depletion, and amortization

 

2,142

 

452

 

7,792

 

1,554

 

FFO

 

8,670

 

6,964

 

16,950

 

7,553

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

309

 

335

 

1,409

 

1,224

 

Indirect equity offering costs

 

 

16

 

 

88

 

Real estate related acquisition and due diligence costs

 

51

 

888

 

1,811

 

5,061

 

Dividends on Series B Participating Preferred Stock and and distributions on Series A preferred units

 

(3,142

)

(858

)

(6,856

)

(2,915

)

AFFO

 

$

5,888

 

$

7,345

 

$

13,314

 

$

11,011

 

 

 

 

 

 

 

 

 

 

 

AFFO per diluted weighted average share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AFFO weighted average common shares

 

37,442

 

20,658

 

37,194

 

19,107

 

 

 

 

 

 

 

 

 

 

 

Net income per share available to common stockholders

 

$

0.08

 

$

0.26

 

$

0.03

 

$

0.09

 

Income available to redeemable non-controlling interest and non-controlling interest in operating partnership

 

0.09

 

0.06

 

0.21

 

0.24

 

Depreciation, depletion, and amortization

 

0.06

 

0.02

 

0.21

 

0.08

 

Stock based compensation

 

0.01

 

0.02

 

0.04

 

0.06

 

Real estate related acquisition and due diligence costs

 

 

0.04

 

0.05

 

0.26

 

Dividends on Series B Participating Preferred Stock and and distributions on Series A preferred units

 

(0.08

)

(0.04

)

(0.18

)

(0.15

)

AFFO per diluted weighted average share

 

$

0.16

 

$

0.36

 

$

0.36

 

$

0.58

 

 

 

 

For the three months ended
December 31,

 

For the twelve months ended
December 31,

 

(in thousands)

 

2017

 

2016

 

2017

 

2016

 

Net income

 

$

6,528

 

$

6,512

 

$

9,158

 

$

5,999

 

Interest expense

 

3,709

 

2,089

 

13,561

 

9,959

 

Income tax expense

 

 

(85

)

 

11

 

Depreciation, depletion, and amortization

 

2,142

 

452

 

7,792

 

1,554

 

EBITDA

 

$

12,379

 

$

8,968

 

$

30,511

 

$

17,523

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

309

 

335

 

1,409

 

1,224

 

Indirect equity offering costs

 

 

16

 

 

88

 

Real estate related acquisition and due diligence costs

 

51

 

888

 

1,811

 

2,789

 

Adjusted EBITDA

 

$

12,739

 

$

10,207

 

$

33,731

 

$

21,624

 

 

 

 

For the three months ended
December 31,

 

For the twelve months ended
December 31,

 

 

 

2017

 

2016

 

2017

 

2016

 

OPERATING REVENUES:

 

 

 

 

 

 

 

 

 

Rental income

 

$

14,575

 

$

13,206

 

$

42,956

 

$

29,668

 

Tenant reimbursements

 

678

 

(13

)

1,909

 

263

 

Crop sales

 

269

 

82

 

799

 

846

 

Other revenue

 

41

 

57

 

555

 

224

 

 

 

$

15,563

 

$

13,332

 

$

46,219

 

$

31,001

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

1,497

 

850

 

5,897

 

2,379

 

NET OPERATING INCOME (NOI)

 

$

14,066

 

$

12,482

 

$

40,322

 

$

28,622

 

 

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Non-GAAP Financial Measures

 

The Company considers the following non-GAAP measures as useful to investors as key supplemental measures of its performance: FFO, NOI, AFFO, EBITDA and Adjusted EBITDA. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss as a measure of the Company’s operating performance. FFO, NOI, AFFO, EBITDA and Adjusted EBITDA, as calculated by the Company, may not be comparable to other companies that do not define such terms exactly as the Company.

 

FFO

 

The Company calculates FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as net income (loss) (calculated in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, plus real estate related depreciation, depletion and amortization (excluding amortization of deferred financing costs), and after adjustments for unconsolidated partnerships and joint ventures. Management presents FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring the Company’s operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from sales of depreciable operating properties, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. The Company also believes that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare the Company’s operating performance with that of other REITs. However, other equity REITs may not calculate FFO in accordance with the NAREIT definition as the Company does, and, accordingly, the Company’s FFO may not be comparable to such other REITs’ FFO.

 

AFFO

 

The Company calculates AFFO by adjusting FFO to exclude the income and expenses that the Company believes are not reflective of the sustainability of the Company’s ongoing operating performance, including, but not limited to, real estate related acquisition and due diligence costs and stock-based compensation.

 

Changes in GAAP accounting and reporting rules that were put in effect after the establishment of NAREIT’s definition of FFO in 1999 result in the inclusion of a number of items in FFO that do not correlate with the sustainability of the Company’s operating performance.  Therefore, in addition to FFO, the Company presents AFFO and AFFO per share, fully diluted, both of which are non-GAAP measures.  Management considers AFFO a useful supplemental performance metric for investors as it is more indicative of the Company’s operational performance than FFO. AFFO is not intended to represent cash flow or liquidity for the period, and is only intended to provide an additional measure of the Company’s operating performance. Even AFFO, however, does not properly capture the timing of cash receipts, especially in connection with full-year rent payments under lease agreements entered into in connection with newly acquired farms. Management considers AFFO per share, fully diluted to be a supplemental metric to GAAP earnings per share. AFFO per share, fully diluted provides additional insight into how the Company’s operating performance could be allocated to potential shares outstanding at a specific point in time. Management believes that AFFO is a widely recognized measure of the operations of REITs, and presenting AFFO will enable investors to assess the Company’s performance in comparison to other REITs. However, other REITs may use different methodologies for calculating AFFO and AFFO per share, fully diluted and, accordingly, the Company’s AFFO and AFFO per share, fully diluted may not always be comparable to AFFO and AFFO per share amounts calculated by other REITs. AFFO and AFFO per share, fully diluted should not be considered as an alternative to net income (loss) or earnings per share (determined in accordance with GAAP) as an indication of financial performance, or as an alternative to net income (loss) earnings per share (determined in accordance with GAAP) as a measure of the Company’s liquidity, nor are they indicative of funds available to fund the Company’s cash needs, including its ability to make distributions.

 

EBITDA and Adjusted EBITDA

 

Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) is a key financial measure used to evaluate the Company’s operating performance but should not be construed as an alternative to operating income, cash flows from operating activities or net income, in each case as determined in accordance with GAAP. The Company believes that EBITDA is a standard performance measure commonly reported and widely used by analysts and investors in the Company’s industry. However, while EBITDA is a performance measure widely used across several industries, the Company does not believe that it correctly captures the Company’s business operating performance because it includes non-cash expenses and recurring adjustments that are

 

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necessary to better understand the Company’s business operating performance.  Therefore, in addition to EBITDA, management uses Adjusted EBITDA, a non-GAAP measure.

 

The Company calculates Adjusted EBITDA by adjusting EBITDA for certain items such as stock-based compensation and real estate related acquisition and due diligence costs that the Company considers necessary to understand its operating performance. The Company believes that Adjusted EBITDA provides useful supplemental information to investors regarding the Company’s ongoing operating performance that, when considered with net income and EBITDA, is beneficial to an investor’s understanding of the Company’s operating performance. However, EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.

 

Net Operating Income

 

The Company calculates net operating income as total operating revenues (rental income, tenant reimbursements and other revenue) less property operating expenses (direct property expenses and real estate taxes). Since net operating income excludes general and administrative expenses, interest expense, depreciation and amortization, acquisition-related expenses, other income and losses and extraordinary items, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and leasing farmland real estate, providing a perspective not immediately apparent from net income. However, net operating income should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect general and administrative expenses, interest expense, depreciation and amortization costs, other income and losses.

 

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